Cutting contracts and costs earns city $5M

Workers' comp claims fall and old purchase orders are purged

The city's coffers grew by $5 million thanks to the cancellation of outdated purchase orders and a drop in workers' compensation costs, Mayor Mufi Hannemann announced.

"This number could grow as we continue these (budget) reviews," the mayor said yesterday.

Old purchase orders that had been reflected on city books as liabilities were closed, releasing $3.1 million back into the city general fund.

Budget Director Mary Pat Waterhouse said that the purchase orders were for a gamut of services and products including equipment and construction consultation.

During a review, the Mayor's Project Management Team discovered a number of outdated purchase orders -- some dating back 10 years -- that were listed as outstanding financial obligations on the city's books.

For example, Waterhouse said, a contract for $20,000 in consulting services might have actually cost only $15,000, but the city could not use the $5,000 left over until the contract was closed.

Prior to the review, there was no systematic way of checking on the status of these contracts, and it was left up to departments to tell city accountants what contracts they wanted to lapse.

"When we came in, that's what we saw and that's why I asked, if it's just sitting on the books and we're carrying it over every year in our books as a financial obligation, let's resolve that once and for all," Hannemann said.

Waterhouse said her department will now set a date for when contracts older than two years old will lapse, and it will be up to the departments to justify keeping those contracts open.

"We're going to be doing this every year now, going through this review ... with the departments to make sure these are closed out," she said.

Meanwhile, Human Resources Director Ken Nakamatsu said that injured employees returning to work faster as well as fewer claims have led to a $2 million reduction in workers' compensation costs for the city.

Last year, the city had $12.5 million in workers' comp costs with the fiscal year just completed compared with $14.5 million the previous year.

Nakamatsu said that departments are promoting safety in the workplace, leading to fewer injuries and claims. Statistics show that claims went to 430 in the latest fiscal year from 460 a year earlier.

Bringing employees back to work as quickly as possible -- even on light duty or part time -- also reduces workers' compensation costs, he said.

The savings will be put into the general treasury fund and be re-appropriated in the next budget, Waterhouse said.

City's amphibious excavator goes to state

The city has given the state an amphibious excavator that cleaned up aquarium plants gone wild -- called Salvinia molesta -- in Lake Wilson in 2003.

The city bought the pontoon-mounted, 31-ton Caterpillar backhoe for $496,121 in 2001. It scooped out the water weed nicknamed the green monster that covered the lake.

Mayor Mufi Hannemann said the piece of heavy machinery sat mostly idle since then. The mayor said that trying to convert the equipment to operate on land would have been cost-prohibitive.

Last month, the city gave the equipment to the state Department of Land and Natural Resources, which was looking for such a piece of machinery. Gov. Linda Lingle said in a thank-you letter to the city that the equipment will be used for wildlife habitat enhancement work, the city said.

Hannemann said he hopes the excavator will help nudge the state into maintaining Kawainui Marsh. The city and state are at odds over who should maintain the marsh.